Patterns exist everywhere, in nature, clothing, architecture, and others. They are often easy to identify and understand. In the stock market as well, candlestick patterns predict price movements, helping the trader understand if it is the phase of a bear market or a bull market.
Published on 07 April 2022
OPEN A FREE* DEMAT AND TRADING ACCOUNT
IN 15 MINS*
Candlestick charting is one of the most useful charting methods to identify the underlying trends across time horizons. Traders use different candlestick patterns to assess different market conditions and trade setups.
What is a Bearish Candlestick?
A candlestick is the pictorial representation of an asset’s price movement. For example, a bearish candlestick enables traders to quickly interpret the fall in stock prices and the downward market trend from just a few price bars.
The candlestick has three features:
The body - It showcases the open-to-close range.
The wick - It represents the intraday high and low. The shadow also indicates the same.
The colour - It helps traders interpret the direction of market movement. If the colour is white or green, it indicates a price increase, thereby hinting at a bull market trend. If the colour is black or red, it represents a fall in prices and indicates bearish patterns.
Candlestick patterns are one of the most useful tools to identify trading signals. Therefore, before you start trading, it is vital to understand the identification of a candlestick pattern and its subsequent interpretation. Also Read: Long Wick Candlestick Pattern
In this article, we explore the five most powerful bearish candlestick patterns.
5 Most Powerful Bearish Candlestick Patterns
Here are the 5 most powerful bearish candlestick patterns:
Bearish Engulfing Pattern
The bearish reversal pattern or the bearish engulfing pattern is easy to spot and useful in bullish markets. Since it is a trend reversal pattern, it appears at the top of an uptrend due to the selling pressure exerted by the sellers. It indicates a fall in prices.
This bearish pattern triggers a reversal of the ongoing uptrend as buyers are losing momentum. Usually, the pictorial depiction of the pattern involves two candles. The second red candle engulfs the body of the previous green candles.
Dark Cloud Cover
This pattern is another bearish candlestick reversal pattern. It occurs at the end of an uptrend and indicates weakness in the uptrend.
The Dark cloud cover is the bearish counterpart of the Piercing candlestick pattern. However, traders can spot the pattern in a bullish trend when buyers have complete control.
The pattern involves two candlesticks. The first is a bullish candlestick (green), while the second is a bearish candlestick (red). The bearish candle is an indicator of the selling pressure. A larger candle indicates the higher intensity of bearish reversal.
With an increase in stock prices, the pattern becomes essential for the reversal to the downside.
Bearish Harami
The third bearish candlestick pattern is Bearish Harami. It is seen in the uptrend and is considered a reversal pattern. The pattern is formed with a long bullish candle on Day 1, followed by a smaller bearish candle on Day 2.
The trader needs to observe a vital aspect in this pattern. The prices on Day 2 opened lower than the prices on the previous trading day, and they were not able to rise back to the close of Day 1. It is a signal of uncertainty in the continuation of the ongoing trend.
Bearish Harami is the opposite of the engulfing pattern. The first candlestick here is larger, while the second candlestick is smaller.
Evening Star
The bearish counterpart of a Morning Star pattern is an Evening Star. It appears at the top of a revival and is formed by three candles.
The first candle is a long bullish candle in the colour green. The second candle is small, ideally a Doji candle. The last candle is a long bearish candle, indicating the end of the bull move. The pattern replicates the structure of a star.
Gravestone Doji
The last bearish pattern is the Gravestone Doji. It is a single candlestick pattern. But, it is still one of the most definite and earliest signals that appear at the top of the uptrend.
It indicates that the buyers/bulls are pushing prices higher than the point where buyers face extreme pressure and feel exhausted. The pattern is formed when the open, low, and closing prices are close to each other and have a long upper shadow. In this candlestick pattern, a long shadow indicates a more negative candle.
Conclusion
Many expert traders consider candlestick charting like any other tool, as it gives no additional information regarding the market action. They believe that all other types of charts also provide almost similar real-time market information.
But it is vital to understand why candlestick patterns are popular and most commonly used. Their visual appeal stands out, and they can provide data relationships easily. Candlesticks represent the interaction that takes place between sellers and buyers and share the entire picture, unlike other types of charts.
Team Espresso
We care that you succeed
Bringing readers the latest happenings from the world of Trading and Investments specifically and Finance in general.
Everything You Need to Know About Volume Indicator
While investing in the stock markets, there are several things that you need to look at. One such factor is the volume of a specific stock being traded at a given point in time. In the stock market, many trade exchanges take place every day. While some investors buy and sell their stocks on the same day, others hold them for a longer period.
If there is one thing the stock market does almost like clockwork, it is swing. Not only do the prices of different stocks in the market keep fluctuating, but so do the corresponding fortunes of the holders of different positions on said securities. Whilst intra-day trading is a commonly used approach to use the swing of the stock market to trade stocks within a day, some traders tend to prefer swing trades.
Candlestick pattern is a commonly used technical analysis tool in intraday stock trading. The pattern offers a collective visual depiction of the size of price fluctuations. Traders use the candlestick pattern to identify price patterns and depict the near-future direction of the stock price.
Candlestick patterns are one of the most useful charting methods traders use to predict a stock’s price movement. The pictorial representation of stock prices and the way of displaying market information makes it easier for traders to use the data to their maximum advantage.
A bull market is a situation when stock prices have gone up. Similarly, a bear market is when stocks have fallen. The signs of a bull market include low unemployment, high consumer confidence, and strong economic growth.
A red candle is considered to indicate bearish patterns. In this timeframe, the sellers or bears are in control. Bearish candlestick patterns can be single or multiple candlestick patterns. When the candlestick has a top shadow, it shows that the bulls were unable to sustain at higher levels and the prices fell, thus creating a bear market.
The five powerful bearish candlestick patterns include:
Bearish Engulfing Pattern
Dark Cloud Cover
Bearish Harami
Evening Star
Gravestone Doji
Related Articles
Everything You Need to Know About Volume Indicator
While investing in the stock markets, there are several things that you need to look at. One such factor is the volume of a specific stock being traded at a given point in time. In the stock market, many trade exchanges take place every day. While some investors buy and sell their stocks on the same day, others hold them for a longer period.
If there is one thing the stock market does almost like clockwork, it is swing. Not only do the prices of different stocks in the market keep fluctuating, but so do the corresponding fortunes of the holders of different positions on said securities. Whilst intra-day trading is a commonly used approach to use the swing of the stock market to trade stocks within a day, some traders tend to prefer swing trades.
Candlestick pattern is a commonly used technical analysis tool in intraday stock trading. The pattern offers a collective visual depiction of the size of price fluctuations. Traders use the candlestick pattern to identify price patterns and depict the near-future direction of the stock price.
Candlestick patterns are one of the most useful charting methods traders use to predict a stock’s price movement. The pictorial representation of stock prices and the way of displaying market information makes it easier for traders to use the data to their maximum advantage.
A bull market is a situation when stock prices have gone up. Similarly, a bear market is when stocks have fallen. The signs of a bull market include low unemployment, high consumer confidence, and strong economic growth.
A red candle is considered to indicate bearish patterns. In this timeframe, the sellers or bears are in control. Bearish candlestick patterns can be single or multiple candlestick patterns. When the candlestick has a top shadow, it shows that the bulls were unable to sustain at higher levels and the prices fell, thus creating a bear market.
The five powerful bearish candlestick patterns include:
Sharekhan Comtrade Private Limited (TM) operates the web site accessible from the URL www.myespresso.com (the “web site”').
Sharekhan Comtrade Private Limited is committed to protecting your privacy and utilising technology that gives you the most powerful, safe, online experience that you can get anywhere else.
Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.
Sharekhan Comtrade Private Limited requests the minimum information it believes necessary to achieve this goal.
The following discloses Sharekhan Comtrade Private Limited's information gathering and dissemination practices for the Web Site:
System Data:
Sharekhan Comtrade Private Limited uses your IP address to help diagnose problems with our server and to administer the web site. Your IP address is used to identify you and your shopping cart and to gather broad demographic information.
Registration Data:
The Web Site's registration form may require users to give us contact information (like their name, phone number and e-mail address), unique identifiers (like their PAN Number) and demographic information (like their pin code, age or income level). The Web Site uses customer contact information from the registration form to send the users information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Comtrade Private Limited's partners. The customer's contact information is also used to contact the visitor when necessary. Unique identifiers (such as PAN numbers) are collected to verify the user's identity. Demographic and profile data is also collected at the Web Site. We use this data to tailor the visitor's experience at the Web Site, showing them contents that we think they might be interested in, and displaying the contents according to their preferences. This information is shared with advertisers on an aggregate basis.
Links and Co-Branded Sites:
This site contains links to other Web Sites which are not necessarily been screened or reviewed by www.myespresso.com. Sharekhan Comtrade Private Limited is neither responsible for the privacy practices or the contents of such Web Sites nor shall be held answerable for the inaccurate, inappropriate or offensive data, material, information, products and services that may be viewed on those sites.
Sharekhan Comtrade Private Limited may operate a number of co-branded sites. Policies regarding information collection and sharing may differ on some of these co-branded sites. If you have any particular questions, you should check the privacy statement that appears on each co-branded site.
Order Forms:
The Web Site uses an order form for customers to request information, products and services. The Web Site collects visitors' contact information (like their mobile number or e-mail address), unique identifiers (like their PAN number) financial information (like their account or credit card numbers) and demographic information (like their pin code, age or income level). Contact information from the order form is used to send orders, information about Sharekhan Comtrade Private Limited, and promotional material from some of Sharekhan Comtrade Private Limited's partners to the visitors of the Web Site. The visitor's contact information is also used to get in touch with the visitor when necessary. Financial information that is collected is used to check the users' qualifications and bill the user for products and services. Unique identifiers (such as PAN numbers) are collected from Web Site visitors to verify the user's identity.
Surveys and Contests:
The Web Site's online surveys ask visitors for contact information (like their mobile number or e-mail address) and demographic information (like their pin code, gender, age or income level). The Web Site uses contact data from its surveys to send the user information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Ltd.'s partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below. Demographic and profile data is also collected at the Web Site. The Web Site use this data to tailor its visitor's experience at the Web Site, showing them content that it thinks they might be interested in, and displaying the content according to their preferences. This information is shared with advertisers on an aggregate basis.
Sharekhan Comtrade Private Ltd run contests on the Web Site in which we ask visitors for contact information (like their e-mail address). Sharekhan Comtrade Private Limited uses contact data from its contests to send users information about Sharekhan Comtrade Private Ltd. and promotional material from some of our partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below.
Third-Party Advertisement Servers:
Sharekhan Comtrade Private Limited engages the services of an outside advertisement company to display advertisement on the Web Site. These advertisements may contain cookies. While Sharekhan Comtrade Private Limited uses cookies in other parts of the Web Site, cookies received with banner advertisements are collected by the Advertisement company, and Sharekhan Comtrade Private Limited does not have access to this information.
Protection of your Data and Information:
The privacy and protection of your data and information provided to us is of vital importance. Sharekhan Comtrade Private Limited shall ensure to safeguard the security and confidentiality of any information you share with us. Any personally identifiable information of the customers obtained by us shall not be used or shared other than for the purposes to which the customers consents. However security and confidentiality of information cannot be guaranteed cent percent. Hence despite our utmost efforts to protect your personal information, Sharekhan Comtrade Private Limited and www.myespresso.com cannot warrant the security of any information you transmit to us through our online services. Such transmission of your personal information is done at your own risk.
Disclosure of Customer Information :
Sharekhan Comtrade Private Limited and www.myespresso.com shall not deliberately disclose customer's personally identifiable information to any unauthorized third person, save and except where such information shall be disclosed in good faith and for the purpose of law for the time being in force or to protect the rights and property of Sharekhan Comtrade Private Limited and www.myespresso.com.
Public Forums :
The Web Sites makes chat rooms, forums, message boards and/or news groups available to its users. Please remember that any information that is disclosed in these areas becomes public information and you should exercise caution when deciding to disclose your personal information.
Supplemental Information :
The Web Site supplements the information that you provide with information that is received from third parties.
The Web Site DOES NOT entice by the prospect of a special game, prize or other activity, to divulge more information than is needed to participate in the activity.
Further to the above, in light of the recently notified Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011. (Hereinafter referred to as the Rules)
The following shall be deemed to be sensitive information :
Password;
Financial information such as Bank account or credit card or debit card or other payment instrument details;
Physical, physiological and mental health condition;
Sexual orientation;
Medical records and history;
Biometric information;
Any detail relating to the above clauses as provided to body corporate for providing service; and
Any of the information received under above clauses by body corporate for processing, stored or processed under lawful contract or otherwise:
provided that, any information that is freely available or accessible in public domain or furnished under the Right to Information Act, 2005 or any other law for the time being in force shall not be regarded as sensitive personal data or information for the purposes of Rules.
Collection of Information:
Compliance with KYC guidelines as per SEBI / Exchanges / Or any other Act, law or regulation requiring the same and any internal KYC guidelines formulated by Sharekhan Comtrade Private Limited.
In order to provide enhanced trading experience to the client.
In order to provide any further information to be provided to regulators.
Such information may be collected in a manner that the client is always aware of the collection and purported usage of the same. The client shall have an option to withdraw consent to share the information. However such intimation shall be required in writing. Such intimation shall only be taken into account from the date on which the same is received. Sharekhan Comtrade Private Limited may choose to stop services to such a client in case such intimation is received. Such information shall only be used for the purpose it is collected.
Clients would be allowed an option not to disclose any information to be collected, provided the same is in compliance with regulatory requirements.
Disclosure of information:
Disclosure of sensitive information would be as per the terms agreed by the clients. For any change in such terms, the clients would be informed.
Provided no consent may be required in case the same is being shared as per compliance guidelines or as required by regulators.
Any information being disclosed to third parties would be in accordance with the Rules and would be done provided such third party has the same level of compliance guidelines as Sharekhan Comtrade Private Limited.
Sharekhan Comtrade Private Limited shall allow clients to review their personal information and the same shall be allowed to be edited provided exchange guidelines relevant to the same are followed.
Sharekhan Comtrade Private Limited shall maintain reasonable security practices and procedures and maintain a comprehensive documented information security programme. In the event of an information security breach, Sharekhan Comtrade Private Limited or a person on its behalf shall be required to demonstrate as and when called upon to do so by the agency mandated under the law, that there have implemented security control measures as per their documented information security programme and information security policies and information security policies that contain managerial, technical, operational and physical security control measures that are commensurate with the information assets being protected with the nature of business.
KYC Languages
Download Client Registration Documents (Rights & Obligations, Risk Disclosure Document, Do's & Don't's) in Vernacular Language :
Note: "This document is a translated version of the client registration documents in English and is being provided in vernacular language to facilitate better understanding by the investors. In case of any ambiguity, the contents of the English version would prevail."
NDNCR Terms & Conditions
By accepting the Terms & Conditions, you authorise Espresso, its representatives and agents to provide information about various products, offers and services provided by Espresso through any mode, including telephone calls, SMSes, emails, letters and any other mode of communication. You also confirm that laws in relation to unsolicited communication referred in "National Do Not Call Registry" as laid down by "Telecom Regulatory Authority of India" will not be applicable for such information/communication.
Filing Complaints on SEBI Complaint Redress System (SCORES) - Easy and Quick
Register on the SCORES portal
Mandatory details for filing complaints on SCORES:
Name
PAN
Address
Mobile Number
Email ID
Benefits:
Effective communication
Speedy redressal of grievances
You can file complaints on SCORES through https://scores.gov.in/scores/Welcome.html
